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JP Morgan chairman and chief executive officer James Dimon had just committed the most expensive blunder of his 30-year career, failing to detect the risk of trades that had begun to generate huge losses at the bank.

On April 30, associates who were gathered in a conference room handed Dimon summaries and analyses of the losses. But there were no details about the trades themselves. "I want to see the positions!" he barked, throwing down the papers, according to attendees. "Now! I want to see everything!"

When Dimon saw the numbers, these people say, he couldn't breathe.

Those trading positions have produced losses that could total as much as $5bn, tarnishing the record of an executive who had thrived through the global financial crisis and who has long been known for paying close attention to the bank's trading activity, its risk profile and the activities of its senior employees.

JP Morgan, the nation's largest financial firm by assets, is struggling to contain the damage, which already has shaved off more than $25bn in shareholder value.

This behind-the-scenes account of the disaster—based on interviews with numerous JP Morgan executives and with officials on Wall Street and in Washington—provides new details about the drama inside the bank as executives sought to understand the scope of the losses and decide what to do about them.

Among other things, Dimon initially resisted ousting the executive at the center of the mess, confided in his wife that he had "missed something bad," and expressed regrets with his colleagues one night over vodka about how they had all let the firm down.

"The big lesson I learned: Don't get complacent despite a successful track record," Dimon said in an interview on Wednesday. "No one or no unit can get a free pass."

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The debacle has raised broad questions on Wall Street and in Washington about whether any executive can properly oversee such a large financial institution, whether new regulatory rules will do anything to prevent another financial crisis and whether tougher regulation is needed to further rein in risky bank trading, particularly at financial behemoths that are viewed as too big to fail.

The bank has ousted the executive in charge of its chief investment office, a huge trading unit at the heart of the scandal that has contributed more than $4bn of net income over the past three years—nearly 10% of JP Morgan's overall profit during that period.

The stakes are high. Dimon personally approved the concept behind the disastrous trades, according to people familiar with the matter. But he didn't monitor how they were executed, triggering some resentment among other business chiefs who say the activities of their units are routinely and vigorously scrutinised.

JP Morgan executives—including general counsel Steve Cutler, the former Securities and Exchange Commission enforcement chief—weighed whether or not to disclose the losses immediately.

Some argued that the losses weren't material, that the firm didn't have all the details and that there was a chance the trades could ultimately turn around.

Dimon directed the bank to delay a quarterly regulatory filing, scheduled for April 27, that would provide the status of its business for this year's first three months, because he didn't have a firm understanding of the trades' impact.

On Thursday, the chairman of the Senate Banking Committee, Senator Tim Johnson, a Democrat from South Dakota, said he plans to ask Dimon to testify before the committee about the loss.

Dimon has weathered difficult times before. He was the protégé of former Citigroup chief executive Sanford Weill before being fired in 1998 after clashing with Weill. He joined Bank One, which was bought by JP Morgan Chase, where he took the helm in 2005.

That year he named Chase executive Ina Drew to head of the chief investment office, or CIO. The unit was responsible for taking charge of the bank's overall risks, and for managing what is now $360bn of safe, highly liquid securities. Drew hired Achilles Macris the next year to oversee trading in London, and the CIO group began to expand into riskier derivatives, instruments that derive their value from an underlying financial index or product.

Blessed by Dimon, the activity originally was designed to provide an economic hedge for the bank's other holdings, executives say. It expanded, particularly after JP Morgan in 2008 bought troubled lender Washington Mutual, which held riskier securities and assets that required hedging.

In recent years, some of the group's trading morphed into what essentially amounted to big directional bets, and its profits and clout grew. Last year, Macris dropped risk-control caps that had required traders to exit positions when their losses exceeded $20m. Drew and Macris declined to comment.

Dimon was unaware of the risk-control change, according to colleagues. Indeed, he had appeared to have started paying less attention to details of the group's trading activities amid the hefty profits, colleagues say.

At Monday morning operating-committee meetings, where Dimon grilled business heads about their units' problems, he would rarely question Drew rigorously, according to attendees. When Dimon reviewed the profit-and-loss statements, the CIO group routinely showed a profit.

All that changed on April 6, when Dimon read a page-one article in The Wall Street Journal about how Bruno Iksil, a CIO trader dubbed the "London Whale" because of his large trades, was roiling the markets and putting the bank at risk of losses.

Dimon had recalled that he was aware of the group's strategy to take a bearish position on the economy, an official says. And he also recalled that early this year he approved a reduction in that position amid signs of economic recovery, though the official says Dimon had never vetted the "particular means to execute" the strategy.

At the bank's April 9 operating-committee meeting, JP Morgan executives discussed the Journal's "London Whale" piece, according to attendees. Drew told the group that the bank had made both bullish and bearish trades and that "hedge funds are squeezing us," attendees say. But she was adamant that the trades would work out.

"We can ride through this," she said, according to attendees. "It's blown out of proportion."

On an April 13 conference call after the bank announced first-quarter earnings, Dimon, relying on what Drew had told him, called reports on the CIO trades a "complete tempest in a teapot."

But losses—roughly $100m or more a day—soon began showing up on the CIO books, JP Morgan officials say. Dimon, who saw himself as a shrewd risk and financial manager, was angry at himself for failing to detect the group's exposure—and at the group for taking it on, colleagues say.

He asked Drew for daily reports, which were summaries of positions and analyses of remedies. The CIO losses kept growing, even as JP Morgan worked to prepare its quarterly regulatory filing, called a 10-Q, for release on April 27.

"We're not filing that 10-Q," Dimon told his operating committee that week, according to attendees. "I have to understand the trades and their impact better."

As the losses piled up, Drew and her group continued to provide summaries and analyses of the trading action. Finally, Dimon had had enough, leading to his demand for the specific trading positions on April 30.

For the first time, Dimon saw all the positions, how they were connected, and how complex they were. It made him queasy, he told colleagues.

He immediately set up a war room on the 48th floor of JP Morgan's Park Avenue headquarters in Manhattan, led by JP Morgan's risk chief John Hogan. Financial, risk and regulatory managers gathered in offices and conference rooms there, assembling documents and scribbling on white boards.

Dimon told the group: "We're in a major storm," attendees say. "We've got to get to the bottom and come clean."

He didn't sleep well for the next several nights, he told colleagues, and fought the anxiety by getting up very early to exercise and head into the office.

Dimon tried to keep a business-as-usual face for peers and clients. On May 2, he attended a meeting at the Federal Reserve Bank of New York, where he is a director, and the next day an economic conference hosted by the University of Rochester, a big banking customer.

On May 7, JP Morgan vice chairman James Lee pulled Dimon out of his war room for a meeting with Facebook chief executive Mark Zuckerberg and his team. The bank is a lead underwriter for the social network's huge initial public offering. Dimon donned a jacket Lee had designed to mimic Zuckerberg's famous hoodie.

That week, bank officials grappled with growing losses on the CIO trades. Some executives, frustrated that Drew had gotten what they viewed as special treatment, pressed Dimon to fire her. Dimon delayed the inevitable, they say, responding: "What if this were your sister after 30 years of great performance and you said: 'You're out of here'?"

That week, the executives worked into the night as they prepared to release the 10-Q. Some of them advised Dimon to consider not disclosing the losses yet, colleagues say.

"The last thing I told the market—that it was a tempest in a teapot—was dead wrong," Dimon said, according to an official. "It's better to just tell the world what has happened, as far as we know."

On May 9, Dimon flew to Columbus, Ohio, for a long-planned bank event and then a taping of "Meet the Press." The host, David Gregory, wanted Dimon's perspective on the economy going into the election year. Dimon knew he couldn't reveal the bomb he was about to drop the next day. (He later retaped the segment after announcing the losses.)

Dimon returned to his office the next morning, jotting on a folded piece of paper a reference to "self-inflicted" losses. Meeting with executives in his personal conference room, they staged a mock conference call with investors, which would take place later in the afternoon. They quizzed him: How big could the losses be? Will the firm claw back pay? They tried to trip him up into revealing the firm's trading positions.

"There's blood in the water—hedge funds are going to come after us and make it worse," one executive told him, according to attendees.

Dimon publicly disclosed the losses in a conference call on May 10. Afterward, he told Lee: "Maybe I can sleep tonight," according to a person familiar with the conversation.

At home with his wife that evening, he confided to her: "I missed something bad."

The next morning, executives prepared talking points. Lee called dozens of CEOs to assure them the firm was healthy. Mary Erdoes, chief of the bank's asset management division, called the firm's asset-management and private bank clients to remind them that client business was separate from activities in the CIO group, colleagues say.

Dimon drafted senior executive Mike Cavanagh, a trusted colleague for 20 years, to help figure out how to handle the debacle.

Late that Friday night, several executives gathered in Dimon's office. Dimon and Cavanagh drank vodka. Others had wine. They told their boss how they had let down the firm, attendees say. "We all did," Dimon replied, according to attendees. "Put on your JPM jerseys and get ready. We are going to take a lot of hits. We'll draft our best team and get through this."

Nearly all senior executives came into the office on Mother's Day to help Cavanagh set up a SWAT team. Since then, the team has been holed up in conference rooms gathering documents to respond to multiple investigations.

Over the weekend, Dimon accepted Drew's offer to resign.

He named as the new CIO chief Matt Zames, co-head of the investment bank's fixed-income unit, and made other changes to ramp up risk controls and manage the bank's exit from the controversial trades.

On Monday, Dimon accompanied Drew to the firm's trading floor to announce her departure, and then to the operating-committee meeting, where Drew apologised, attendees say. Dimon gave her a bear hug on the way out, they say.

Some of the bank's directors recently have suggested to Dimon that he back off from publicly criticising politicians seeking to more vigorously regulate the banking industry.

At the annual meeting on Tuesday, Dimon didn't completely heed that advice. He continued to criticise the cost and complexity of added regulation. But he said he supports most of the proposed regulatory rules, including some of the so-called Volcker rule, which would bar banks from making bets with their own money.

Next week, Dimon had planned a series of monthly business reviews with all his department heads, which typically run as long as three hours each.